ISLAMABAD: Ministry of Finance (MoF) has advised Ministry of Defence Production (MoDP) to seek ECC approval for establishing Defence Credit Line Facility of $50 million for Sri Lanka before starting negotiations and finalizing terms and conditions, official sources told Business Recorder.

Pakistan and Sri Lanka enjoy cordial relations, characterized by historic affinities, geographic location and cooperation in various fields including defence and defence Industry. Sri Lanka, during last few decades, has emerged as one of the largest markets for the indigenously produced military hardware of Pakistan. However, owing to financial constraints of Sri Lanka, business between the two countries remains much below its potential.

During his visit to Sri Lanka from 23-24 February 2021, Prime Minister Imran Khan announced a Defence Credit Line of $ 50 Million for Sri Lanka to enhance bilateral Defence and Security cooperation. In pursuance of Prime Minister’s commitment with Sri Lankan Government, a draft MoU regarding Defence Credit Line facility was prepared and shared with Ministry of Foreign Affairs, Ministry of Finance and Economic Affairs Division.

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Ministry of Foreign Affairs has concurred with the draft. Currently, the MoU is in process of vetting by Economic Affairs Division and Finance Division. In a recent development; however, MoDP has been advised by Finance Division to obtain principle approval of ECC/ Cabinet for opening of Defence Credit Line Facility of$ 50 million for Sri Lanka, before engaging in negotiations with the bilateral partner.

Finance Division has, itself, supported the proposal in principle. Ministry of Defence has sought principle approval of ECC for extending the Defence Credit Line Facility of $50 million to Sri Lanka in terms of Rules 16(1) d) of the Rules of Business 1973.

Copyright Business Recorder, 2022